The Custom Moving Averages indicator is an upgraded version of the traditional Moving Average indicator that can is used to determine the trend’s direction. In this guide, we’ll mention what the indicator is all about and how you can trade it.
What is the Custom Moving Averages Indicator?
Custom Moving Averages is a modified version of the traditional MA indicator. Moving Average is a commonly used technical analysis indicator and can help you identify trends and potential changes in market direction.
It is calculated by taking the average price over a specific period of time and then plotting the result on a chart. The Custom Moving Averages uses the same calculation to identify the market trend.
Custom Moving Averages is one of the easiest indicators to use, as it doesn’t overpopulate the chart.
Custom Moving Averages Strategy
There are many ways to use the Custom Moving Averages as the traditional MA.
When the price goes above the indicator, it is considered an uptrend, and when the price goes below, it is considered a downtrend.
The indicator can also be used to identify potential support and resistance levels. When the price is close to its Custom Moving Averages, it may act as a support level, and when the price is far away from the Custom Moving Averages, it may act as a resistance level.
You can also use the Custom Moving Averages for a crossover strategy. When the shorter-term Custom Moving Averages crosses above the longer-term, it is considered a buy signal.
Conversely, when the shorter-term Custom Moving Averages crosses below the longer-term, it is considered a sell signal.
Like the traditional MA, you can add other forms of technical analysis with the Custom Moving Averages for further signal confirmation.
Although Custom Moving Averages work on all timeframes, it’s better to look for trends on a longer timeframe.
- The price must go above the Custom Moving Averages.
- Wait for the price to go above and then enter.
- You could place a stop-loss at the recent swing low.
- You could set take-profit at the recent high or exit the trade when the price dips below the Custom Moving Averages.
- The price must go below the Custom Moving Averages.
- Wait for the price to go below and then enter.
- You could place a stop-loss at the recent swing high.
- You could set take-profit at the recent low or exit the trade when the price goes above the Custom Moving Averages.
Custom Moving Averages Pros & Cons
Here are the pros and cons of the Custom Moving Averages:
- The indicator is easy-to-understand.
- It can be applied at any timeframe.
- It can also act as support and resistance levels.
- You can customize the period to fit your trading strategies.
- It only uses past data to find the trend’s direction.
- It can be prone to false signals.
The Custom Moving Averages work like a traditional MA and help in finding the trend’s direction. This forex indicator is easy to use and you can use it for multiple strategies.
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